“Numerous life insurance options cater to diverse budgets and individual life circumstances. However, the abundance of choices can be daunting. To streamline your selection process and secure suitable coverage within your budget, it’s advisable to compare life insurance quotes from multiple companies.”
What Is Life Insurance?
Life insurance functions as a contractual agreement between you and a life insurance company, referred to as a policy. This agreement entails your commitment to paying a premium, typically through regular installments, to maintain the policy’s validity. In return, the insurance company pledges to provide a death benefit to your chosen beneficiary upon your demise while the policy remains active.
The magnitude of the death benefit hinges on the coverage amount you opt to procure. Coverage extents can vary widely, from modest policies, such as those covering funeral expenses starting at $5,000, to substantial sums reaching millions of dollars. It’s possible to designate multiple beneficiaries, specifying the percentage each receives from the payout, or even designate a charitable organization as the beneficiary.
As the coverage amount increases, so does the premium. Moreover, factors like gender, age, health status, and other pertinent details at the time of application influence the life insurance quotes you receive. These quotes are formulated based on your application during the policy purchase process. Importantly, once you secure a life insurance policy, your rates remain fixed, irrespective of any subsequent changes in your health.
Delaying the purchase of life insurance until encountering significant health issues can result in exorbitant premiums or potential declination of coverage altogether.
Calculate How Much Life Insurance You Need
Here’s an easy-to-use calculator to help you determine how much life insurance you need.
Benefits of Life Insurance
Life insurance offers a crucial advantage by furnishing financial security to your loved ones in the event of your passing.
Furthermore, a life insurance policy can offer financial assistance during your lifetime, either through the accrued cash value within the policy or through living benefits that enable access to funds from your own death benefit in case of serious health conditions. For instance, an accelerated death benefit allows for accessing funds if the insured individual is terminally ill.
Your designated life insurance beneficiaries have the flexibility to utilize the payout according to their specific financial needs at the time, offering significant flexibility and support.
Additionally, there exists a notable tax benefit associated with life insurance: the death benefit is typically non-taxable. While there are exceptional circumstances where life insurance may be subject to taxation, in general, beneficiaries receive the full death benefit without any tax liabilities.
Who Needs Life Insurance?
You may need life insurance if you have people who rely on you financially. For example, you may need life insurance if:
- Your family relies on your income.
- You have a person who will be financially dependent on you indefinitely, such as a special needs child.
- You want to provide money to pay for your own burial.
- You want to leave inheritance to your children without having to worry about saving a large sum to pass on.
Types of Life Insurance
There are two primary types of life insurance policies: term life insurance and permanent life insurance. And there are a variety of options for permanent life insurance. So it’s important to understand what each type offers before making a choice.
Term Life Insurance
Term life insurance lets you lock in a rate for the level term period—typically 5, 10, 15, 20, 25 or 30 years. During this time period your premiums will stay level. The insurer will pay a death benefit only if you die while coverage is in force. The longer the term length you choose, the higher your life insurance quotes.
Term life insurance quotes are much lower than permanent life insurance quotes and can be an affordable way to have coverage in force during the years when your family depends on you most for financial support.
Permanent Life Insurance
Permanent life insurance can offer lifelong coverage, as long as premiums are paid. It also offers the ability to build cash value that grows tax-deferred. These features make permanent life insurance quotes higher than term life. Permanent life also can be more complicated than term life because there are a variety of policy types and different ways to build cash value..
Whole life insurance provides lifelong coverage and a cash value feature. It tends to be the most expensive type of life insurance because it offers a guaranteed rate of return on the cash value, and premiums and the death benefit remain the same over time.
Guaranteed issue life insurance is a form of whole life insurance. It’s mainly geared toward older adults who may be in poor health but who want a policy that will help pay for final expenses. There is no medical exam, and you can’t be turned down for guaranteed issue life insurance as long as you meet the age requirements. Coverage typically is limited to $25,000 or less. And the price is high compared with other policies for the coverage you get.
Universal life insurance can also offer lifelong coverage but doesn’t necessarily have the same guarantees as whole life insurance. Universal life policies allow you to adjust the premium payments and death benefit, within certain limits. And some universal life insurance policies have fluctuating rates of return on the cash value.
- Guaranteed universal life might have little cash value, but the premiums and death benefit remain constant. You typically choose an age at which the guaranteed universal life insurance will expire, such as 95, 100 or 105. Choosing a higher age will mean higher premiums, but this type of universal life insurance can be an affordable way to get coverage into your later years.
- Indexed universal life has a cash value component that is tied to a market index, such as the S&P 500, so the rate of return can vary. Indexed universal life policies tend to be complicated and can have high fees.
- Variable universal life offers adjustable premiums and lets you choose how to invest the cash value portion among investment options offered by the insurer. With variable universal life insurance, the rate of return on your cash value will depend on the investments you choose. In addition, the death benefit can fluctuate depending on how well your underlying investments perform.
Comparison: Term Life vs. Permanent Life Insurance
Get A Term Life Insurance Quote
Maximum no-exam coverage
$3 million
Term lengths available
10, 15, 20, 25 or 30 years
How Much Are Life Insurance Quotes?
Life insurance quotes are always free, so you should feel free to gather quotes from multiple companies if you’re shopping for life insurance.
Life insurance quote examples for 20-year, $500,000 term life insurance
Rates are based on non-smoking life insurance buyers in excellent health.
What Is the Average Life Insurance Cost per Month?
It costs an average of $18 a month for a 20-year, $500,000 term life insurance policy for a 30-year-old woman and $21 a month for a 30-year-old man. Compare that to a $500,000 whole life insurance policy, which costs an average of $329 monthly for a 30-year-old woman and $365 monthly for a 30-year-old man.
As you can see, whole life insurance is significantly more expensive than term life, but there are benefits to whole life, such as its cash value.
Average Life Insurance Costs Per Month
How to Get a Life Insurance Quote
Step No. 1: Calculate How Much Life Insurance Do I Need
The key to determining how much life insurance you need is to understand your financial obligations and your financial resources. You want to buy enough life insurance to cover any financial obligations that your resources won’t be able to cover.
Consider financial obligations such as:
- Funeral and burial expenses: The median cost of a funeral with visitation and burial is $7,848, according to the National Funeral Directors Association.
- Income replacement: Consider how much of your annual salary would need to be replaced and for how many years (for example, until all of your kids have graduated college).
- Debts you owe: How much would it cost to continue making mortgage payments or pay off the mortgage entirely? Also add in any other large debts that your family would need to pay off.
- Child care: Your spouse or partner might need to hire someone to care for or transport young children if you’re not around to help.
- College tuition: Consider how much you want to contribute toward your children’s college education and multiply that amount by the number of kids you have.
After you add up financial obligations, subtract the resources your family could use if you were to pass away:
- Emergency savings: Cash reserves can help cover bills or short-term expenses.
- College savings: The more you have saved in a 529 college savings account or other account, the less you’ll need in life insurance to cover the cost of your children’s college education.
- Retirement savings: Funds in a 401(k), IRA or other retirement account could help loved ones cover expenses or be used as a source of income in retirement.
- Existing life insurance: Factor in any existing life insurance policies you might have as resources to cover your obligations. However, be aware that you could lose life insurance coverage you have through work if you leave your job.
- Prepaid funeral costs: If you’ve prepaid for a funeral, that’s one less expense you’ll need to cover with life insurance.
Here’s an easy-to-use life insurance calculator to help you pinpoint your need.
Step No. 2: Evaluate Life Insurance Companies and Policies
A life insurance policy is usually a long-term commitment, so you want to find an insurer with a good reputation who has options that fit your needs at a fair price.
- Look at the insurer’s financial strength from ratings agencies such as AM Best. A good financial strength rating indicates that an insurance company has the ability to pay claims many years down the road.
- If you’re buying term life insurance, look at the insurer’s options for renewing the policy after the level term period or converting the term life to a permanent life policy.
- If you’re buying a permanent life insurance policy such as universal life, look at the policy’s internal fees and how fast it will build cash value. The life insurance policy illustration will show you these numbers.
Step No. 3: Gather Information for the Application
You’ll need to provide some basic information for life insurance quotes. This might include:
- General health information like weight and height
- Medical history, including current and past health conditions
- Family medical history, such as heart disease among parents and siblings
- Medications you’re currently taken or have taken in the past
Step No. 4: Compare Life Insurance Quotes
The best way to find a good price on a life insurance policy is to compare quotes from multiple insurers. You can get free quotes:
- Online for some policy types. It’s relatively easy to find online quotes for term life insurance and guaranteed issue life insurance. For other policy types, such as whole life, expect to have to go through an agent to get quotes.
- By phone or in-person for any type of life insurance. Call or visit a local life insurance agent who can help you get life insurance quotes. A “captive” agent works for only one insurance company, so make sure to speak with an independent agent who sells policies from multiple insurers. In addition, financial advisors can typically give you life insurance quotes as well as help you map out a solid financial plan.
Compare Life Insurance Companies
Compare Policies With 8 Leading Insurers
Get A Quote
Factors Used in Life Insurance Quotes
The main factors that affect life insurance quotes are your age, gender and health. Women tend to pay less because they live longer, on average, than men. Young and healthy adults will get the lowest life insurance quotes and be able to lock in a good rate for the duration of their policies.
Life insurance quotes will typically incorporate factors such as:
- Your medical history, including any current or past health conditions
- Current and past prescriptions
- Your family’s medical history (parents and siblings)
- Your driving history, especially DUI convictions, reckless driving convictions or speeding tickets
- Smoking, drinking and drug use
- Dangerous hobbies, such as skydiving
- Dangerous occupations that include hazardous duties
- Recent bankruptcy
- Criminal record
5 Things to Know Before Getting Life Insurance Quotes
1. Life insurance may be more affordable than you think. The average life insurance quote for a 20-year term life policy with a $500,000 death benefit for a healthy 30-year-old woman is $205 annually or only $17 a month, according to Forbes Advisor’s analysis of average life insurance rates. For a male, the average quote is $252 a year, or $21 a month.
2. The younger you are when you buy life insurance, the less you’ll pay. Your age and your health affect the life insurance quotes you get. Waiting to buy life insurance means you’ll get higher quotes simply because you’ll be older. Plus, if you develop health issues, life insurance quotes will be even higher.
3. You might not need a life insurance medical exam. There are plenty of good options for no-exam life insurance. We found multiple insurers that offer up to 30-year terms and more than $1 million in coverage, without requiring a medical exam.
4. The application process can be fast and easy. If you’re in good health and generally under age 60, you might be able to apply online and get approved for no-exam life insurance coverage in just a few minutes. Life insurance quotes for some no-exam policies can be price competitive with policies that do require an exam.
5. Comparing life insurance quotes can save you thousands of dollars over the life of the policy because prices can vary widely. Work with an independent insurance agent who can shop quotes for you from multiple companies. An experienced agent will know which companies are likely to offer you the best life insurance quotes based on your age and health.
How to Apply for Life Insurance
After you’ve gathered your quotes and you’ve chosen an insurer that will fit your budget and needs, it’s time to apply for a life insurance policy. The application process will vary depending on the type of underwriting that is used.
- Full underwriting: This traditional underwriting process requires you to fill out a lengthy questionnaire, take a life insurance medical exam and give the insurer permission to gather information about you from several third-party sources. The process can take a couple of months, but it likely will result in the lowest life insurance quote (especially if you’re healthy) because the insurer will have enough information to price the policy accurately.
- Accelerated underwriting: This process is similar to traditional underwriting but doesn’t necessarily require a medical exam. And it’s faster because the insurer uses data to assess the risk of applicants. When you apply the insurer will gather data from third-party sources, and you can get approved for coverage in a short time.
- Simplified issue: This process for buying simplified issue life insurance is fast and easy. You answer only a few health questions, then insurers will use third-party sources to gather additional information. No medical exam is required, so insurers often can make immediate decisions about whether to accept or reject applicants. But note that rates are higher for simplified issue policies because insurers have less information about applicants.
If you’re going to be taking a life insurance medical exam, it’s important to take the medical exam seriously because it will impact the life insurance quote you’re offered.
- In the weeks leading up to the exam: Limit salt intake, drink plenty of water and eat a healthy diet that is rich in whole grains, fruits, vegetables and low-fat dairy products. It’s also a good idea to limit your alcohol intake.
- The day before the exam: Avoid alcohol, nicotine and red meat. You’ll also want to avoid over-the-counter medications like antihistamines and decongestants. A good night’s sleep will help improve your blood pressure.
- The day of the exam: Avoid caffeine, strenuous exercise and drink plenty of water. Make sure you have any necessary documentation, like a photo ID and medical information.
How to Find the Best Life Insurance Policy for You
The best life insurance policy for you will depend on your financial goals and reasons for buying life insurance. You’ll need to assess your financial situation to figure out what you already have in place to support loved ones who depend on you financially and what needs you should cover with life insurance.
If you want a policy that will provide financial protection for a certain period of time (such as while your children are young), a term life policy will provide the coverage you need at an affordable rate. If you want coverage that lasts a lifetime and provides cash value that you can access while you’re living, a whole life or universal life policy might be a better fit.
Consider working with a financial planner who can help review your situation and figure out what type of life insurance will fit in your financial plan. You can find a fee-only planner through the National Association of Personal Financial Advisors. Or your workplace might offer you access to financial professionals as part of your benefits.
Life Insurance Terminology
Beneficiary: The person or organization named to receive a life insurance policy payout at the time of the insured’s death.
Cash value: Money that accumulates in a permanent life insurance policy and can be accessed while the insured is alive through a policy loan, withdrawal or a policy surrender.
Death benefit: The amount paid to the beneficiary at the time of the insured’s death.
Face amount: The amount of coverage that is purchased, such as $500,000 or $1 million.
Insured: The person whose life is covered by a life insurance policy.
Policy: The legal document that spells out the terms of a life insurance contract.
Policyholder: Also known as policy owner, the person who owns a life insurance policy. This person is responsible for paying premiums. The policyholder does not have to be the one insured. For example, someone could own a policy on their husband.
Premium: A lump-sum payment or periodic payments made to keep a life insurance policy in force.
Rider: Additional coverage that can be added to an insurance policy (typically at an additional cost).
Underwriting: The process life insurance companies use to gather information about applicants to determine whether to insure them and what rate to charge.
